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© Reuters. FILE PHOTO: A representation of the cryptocurrency Tether is placed on a PC motherboard, in this illustration taken June 16, 2023. REUTERS/Dado Ruvic/Illustration/File photo
(Reuters) – The number of U.S. dollar-pegged stablecoins issued has surpassed $100 billion, the crypto company said on its website on Monday.
Tether issues a stablecoin designed to maintain a constant value of $1. It is often used to move money in cryptocurrencies without being exposed to price fluctuations in other cryptocurrencies such as Bitcoin and Ether.
The company says it maintains its dollar peg by holding dollar reserves equal to the volume of cryptocurrencies it creates.
While the dollar-pegged Tether token is pegged at $1, it has traded as high as $1.0020 in recent days, reflecting increased demand from investors betting on a rising Bitcoin and Tether as Use means to exchange fiat currencies for cryptocurrencies.
“Traders were willing to pay a premium for Tether to get their orders through,” said Justin D’Anethan, head of Asia Pacific business development at digital asset market maker Keyrock.
“Ironically, Tether has always been FUD (plagued by fears about its legitimacy) as it refused to disclose its reserves and balance sheet for years,” D’Anethan said.
“Nevertheless, they exist and have weathered many volatility events from 2017 to today, and the overwhelming majority of cryptocurrency pairs are denominated in USDT – which explains the premium during times of massive bull runs and enthusiasm for the cryptocurrency space.”
Data from CoinMarketCap showed that around $124 billion worth of Tether changed hands in the last 24 hours.
US regulators have warned banks that stablecoin reserves could be subject to rapid outflow, for example if holders rush to convert such tokens back into traditional currency.
As part of a settlement with the New York Attorney General’s Office in 2021, Tether agreed to provide quarterly reports on its reserves for two years.
At the end of 2023, Tether’s reserves included $63 billion worth of U.S. Treasury securities, as well as $3.5 billion worth of precious metals, $2.8 billion worth of Bitcoin, and $2.8 billion worth of “other investments.” $3.8 billion and $4.8 billion worth of “secured loans,” the latest report said.
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